Increase in property market value – Property tax is levied as a percentage of assessed value. Whenever there is an increase in the assessed value of a property, this prompts an increase in the property tax revenue.
Increase in real estate inventory – When there are new developments and/or construction in the city, more properties are included in the assessment bracket, leading to an increase in the property tax revenue.
Ecopolitics – With increasing city expenses, if the city is unable to obtain additional state and federal aid, then the burden on city revenue rises, leading to an increase in property tax. If various tax abatements and exemptions – like 1031 or 421a – are increased or extended, it also puts pressure on forecasted revenue, causing an increased reliance on property tax revenue and a rise in property tax rates.
Funding gap – In 2011 the New York Legislature enacted the New York State’s Property Tax Cap, which limits increases in school and local property taxes to 2 percent a year or the rate of inflation, whichever is less, with narrow limited exemptions while maintaining local control. If there is a gap between budgeted expenditures and forecasted revenue, it’s possible to pass a resolution and override the property tax levy limit.
Economic factors – Various economic factors like the performance of Wall Street, employment, personal income, city tourism, etc. affect property tax revenue. During a recession, economic factors are generally low, meaning tax revenue from those sources is lower and reliance on property taxes increases.
